HARI SREENIVASAN: The push for curbing big banks in the U.S. and Europe dominated the World Economic Forum today. The annual event convened in Davos, Switzerland, and the president of Barclays Bank in Britain warned against measures that force downsizing.

BOB DIAMOND, president, Barclays Bank: I have seen no evidence, I have seen no academic study, I have seen no analysis that suggests that shrinking banks and making all banks smaller or more narrow is the answer.

HARI SREENIVASAN: But French President Nicolas Sarkozy attacked the behavior of major banks in his keynote address. He said it’s — quote — “morally indefensible” when companies destroy jobs and wealth, but make huge profits.

NICOLAS SARKOZY, president, France (through translator): If we do not change banking regulations, if we do not change prudential rules, if we do not change accounting rules — and this is not only a matter of experts’ technique, expertise — if we don’t do all that, then are we leading the sort of capitalism we want? What do we want with this capitalism of ours?

HARI SREENIVASAN: In recent days, Wall Street took a dive after President Obama proposed curbs on bank investing and on bank size.

Today, the market finished with a gain. The Dow Jones industrial average added nearly 42 points to close at 10236. The Nasdaq rose more than 17 points to close at 2221.

The government of Yemen is pledging to carry out economic and political reforms. The promise came at an international conference in London. Secretary of State Hillary Clinton said instability in Yemen is now an urgent national security priority for the U.S. She called for a partnership.

HILLARY RODHAM CLINTON, U.S. Secretary of State: The Yemeni people deserve the opportunity to determine their own future, not leaving their fate to extremists who incite violence and inflict harm. To help the people of Yemen, therefore, we have to do more, but we have to work in conjunction with the government of Yemen. However, the government of Yemen must also do more.

HARI SREENIVASAN: The airliner bombing plot in Detroit has been traced back to Yemen. U.S. officials say the suspect, Umar Farouk Abdulmutallab, was trained by al-Qaida elements there. The Washington Post reported today, U.S. teams have stepped up operations with Yemeni forces, killing six regional al-Qaida leaders in recent weeks.

Taliban forces have rejected an Afghan plan to get them to stop fighting. In an Internet statement, the group warned, financial incentives won’t work. It said the only solution is for foreign troops to withdraw.

But, in Germany, Chancellor Angela Merkel said it would be wrong to set a date to withdraw.

ANGELA MERKEL, chancellor, Germany (through translator): It is very, very important that a signal be sent to the Taliban. Even when all Afghan forces have been trained, the international community will see to it that this army and police are able to survive. Otherwise, the Taliban can hope to attack immediately when the police and security forces are not properly paid, and therefore not motivated.

HARI SREENIVASAN: Merkel met with Afghan President Hamid Karzai on the eve of an international conference on Afghanistan in London. In Afghanistan, 11 suspected Taliban militants were killed in an air and ground strike by NATO and Afghan forces.

Former Honduran President Manuel Zelaya went back into exile today, this time in the Dominican Republic. The leftist leader was ousted in a coup last June, but he returned to Honduras in September and took refuge in the Brazilian Embassy. His departure today came hours after the new Honduran president, Porfirio Lobo, was sworn into office.

Authorities in Peru today worked to rescue hundreds of tourists stranded at Machu Picchu. The ruins of the Incan citadel are world-renowned. At least five people have been killed after five days of heavy rains triggered mudslides and widespread flooding across the area in the Andes Mountains.

In all, some 2,000 people were trapped, including 400 Americans. U.S. officials deployed helicopters to help with evacuations.

Those are some of the day’s main stories. I will be back at the end of the program with a preview of what you will find tonight on the “NewsHour”‘s Web site.

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